Pakistan Economy - News & Updates - Archive

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SMEs important part of economy: ICCI​

ISLAMABAD: Promotion of Small and Medium Enterprises (SMEs) has helped in enhancement of the competitiveness of the economy and generation of employment opportunities. President Islamabad Chamber of Commerce and Industry (ICCI), Mohammad Ijaz Abbasi said economy comprised mainly of the SMEs and their role was clearly indicated by various statistics. Approximately 3.2 million business enterprises in Pakistan while enterprises employing up to 99 persons constitute over 95 percent of all private enterprises in the industrial sector and employ nearly 78 percent6 of the non-agriculture labour force.

Daily Times - Leading News Resource of Pakistan

 

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Joint statement: US to provide $115.5 million in food aid​

WASHINSTON (July 29 2008): President George W. Bush welcomed Prime Minister Syed Yousaf Raza Gilani to Washington today for his first visit to the United States as the leader of Pakistan's democratically-elected civilian government.

The President and Prime Minister reaffirmed their commitment to the long-term Strategic Partnership between the United States and Pakistan, which is based on shared values and holds Immense potential for the enduring peace, security, stability, freedom, and prosperity of Pakistan and of the region. The President affirmed his support for Pakistan's sovereignty, independence, unity, and territorial integrity.

The two leaders agreed that the focus of the broad-based Pakistan-US relationship should remain on ensuring the well being of the people by assisting Pakistan to implement its national development agenda in a comprehensive manner. Pakistan and the US will work together to eliminate the threat of extremism, build strong democratic institutions, modernise education, and increase economic growth and opportunity.

President Bush and Prime Minister Gilani reaffirmed their condemnation of terrorism in all its forms and manifestations. They acknowledged that terrorism and violent extremism pose a common threat to Pakistan, the United States, and the international community.

The two leaders pledged to work together to address this threat and to deny any space to militants or terrorists through increased co-operation. The President recognised the sacrifices the people of Pakistan and the Pakistani security forces have made in the ongoing fight.

The President and Prime Minister reiterated that success in countering terrorism will require a comprehensive strategy, including increased security, improved governance, and opportunity for socio-economic development for the people especially in the less-developed regions of Pakistan.

The President and the Prime Minister expressed/deep sympathy for the families of those who have fallen victim to suicide and other terrorist attacks in Pakistan. The Prime Minister expressed appreciation for US efforts to promote peace and stability in the region. The United States is dedicated to providing Pakistan with the support and tools it needs to lead the fight against terrorism.

The two leaders also committed to increased bilateral economic co-operation to include expanded trade, an improved investment climate, promoting co-operation in the public and private sectors, and agreed to work together to ensure food and energy security as well as facilitate investment in infrastructure and social sectors in Pakistan.

In reaffirming the Strategic Partnership, President Bush and Prime Minister Gilani attached importance to the next round of the Strategic Dialogue, which will be co-chaired by the US Deputy Secretary of State and Pakistan's Foreign Minister, in September 2008 and regularly thereafter to review issues of mutual interest.

In addition, the two leaders committed both countries to undertake the following steps in development, counter-terrorism, economic, and regional co-operation: Focus on the needs of the Pakistani people:

-- Food, Health, Education, Energy, and Democratic Governance

-- The two leaders welcomed recent efforts in the US Congress to extend the United States' assistance commitment to Pakistan to help address Pakistan's most urgent needs, including education, agriculture, and energy. The President will continue to work with Congress to ensure the continued support of the United States to Pakistan over the long-term.

-- The two leaders agreed to institute a separate track for agricultural co-operation under the Strategic Dialogue.

-- The United States will provide $115.5 million in food security assistance to Pakistan, including $42.5 million over the next nine months.

-- The United States will assist with disease control activities in Pakistan to augment the Prime Minister's initiative to combat the spread of hepatitis and other infectious diseases.

-- The United States highlighted its $30 million Pakistan Energy Development program focused on improving power availability, affordability, and efficiency.

-- The United States and Pakistan will hold thc next round of the US-Pakistan Energy Dialogue this fall to help Pakistan meet its vast and growing energy needs.

-- The two leaders agreed to hold the next round of the US-Pakistan Education Dialogue later this year.

-- The two leaders agreed to continue and enhance robust collaboration in science and technology under the successful bilateral Science and Technology Framework Agreement.

-- The United States highlighted its support for democracy-building and improved governance through project funding.

EXPAND BILATERAL TRADE AND IMPROVE THE BUSINESS CLIMATE:

-- The two leaders renewed a joint commitment to pursue steps to establish Reconstruction Opportunity Zones that will expand trade opportunities in parts of Pakistan and Afghanistan.

-- The United States and Pakistan will work together toward a goal of establishing direct non-stop flights between the two countries before the end of 2008, expanding people-to-people ties and improving the investment climate to the benefit of the people of both countries.

-- The United States and Pakistan agree to convene officials promptly to review the status of bilateral investment treaty negotiations.

-- The two countries will reconvene the Joint Council under the Trade and Investment Framework Agreement in September 2008.

-- The US-Pakistan Economic Dialogue will be held on August 11 in Islamabad.

EXPAND SECURITY AND COUNTER-TERRORISM COOPERATION:

-- The two leaders agreed to strengthen the long-term security relationship with a view to enhancing Pakistan's defence capabilities, especially in the field of counter-terrorism, through training and equipment.

-- Reconvene the bilateral Defense Consultative Group this fall with a renewed focus on counterinsurgency and counter-terrorism.

-- Renew co-operative efforts to root out extremism along the Pakistan-Afghanistan border, including the Northwest Frontier Province, the Federally Administered Tribal Areas and Balochistan.

-- Expand co-operation between the US and the Pakistani Frontier Corps and other Pakistani security forces on the front lines in the fight against violent extremism.

-- Focus US security assistance on efforts to enhance the counter-terrorism capability of Pakistan's military forces.

WORK TOGETHER TO ENHANCE REGIONAL PEACE, SECURITY, AND STABILITY:

-- Strengthen the Tripartite Commission between the International Security Assistance Force, Pakistan, and Afghanistan.

-- Support the efforts of Pakistan and Afghanistan to hold the next joint jirga this fall.

-- Hold the next Regional Economic Co-operation Conference in Islamabad this fall.

-- Encourage the Pakistan-India Composite Dialogue process to reduce tensions, build trust, and resolve all outstanding issues. Prime Minister Gilani thanked President Bush and the people of the United States for the hospitality accorded to him, Mrs Gilani, and the members of the Prime Ministerial delegation during their stay in the United States.

Business Recorder [Pakistan's First Financial Daily]

 

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US Senate body approves $15bn aid​

WASHINGTON: The Senate Foreign Relations Committee has approved the Biden-Lugar bill that will provide $15 billion to Pakistan over a 10-year period for the country’s economic consolidation, which will enhance its ability to fight terrorism.

Daily Times - Leading News Resource of Pakistan

 

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LSM registers 4.62 percent growth during 11 months of fiscal year 2007-08​

ISLAMABAD (July 29 2008): The Large Scale Manufacturing (LSM) has showed a dismal growth of 4.62 per cent during the first 11 months of 2007-08 over the same period of previous year, revealed Federal Bureau of Statistics on Monday.

The LSM production was recorded 4.71 per cent in July-April 2007-08 over the same period of last but it declined to 4.62 per cent in July-May 2007-08, according to the FBS provisional statistics about Quantum Index Manufacturing (QIM).

With this declining trend, the production of industrial sector growth may remain even below five per cent for the year against the projected and revised target of 10.5 per cent and 7.5 per cent respectively. The declining trend in LSM growth has continued from last few years. The LSM growth went down from 19.9 per cent in 2004-05 to 8.8 per cent in 2006-07.

The dismal performance by the manufacturing sector, which is the second largest contributors to the economy with 19 per cent of GDP is not good omen for the economy.

The LSM index is based on latest production data of 100 items provided by Oil Companies Advisory Committee (OCAC), Ministry of Industries & Production and provincial Bureau of Statistics (BoS). The break-up of data shows 4.70 per cent growth OCAC index during the first eleven months of 2007-08, followed by 5.13 per cent in ministry of industries index and 3.77 per cent in provincial Bureau of Statistics (BoS) index. Analysis of the data showed a growth of 4.7 per cent in the petroleum production on the back of growth in kerosene oil, motor spirit, high speed diesel, jute batching oil, and solvent naphtha. The eleven-month growth in kerosene oil was 8.01 per cent over last year, 11.63 per cent and 11.82 per cent respectively in motor spirit and high-speed diesel and 8.98 per cent in Jute batching oil and 1.19 per cent in solvent naphtha.

A negative growth of 14 per cent in jet fuel oil, 7.34 per cent in diesel oil, 0.89 per cent in lubricant oil, 3.07 per cent in LPG and 9.89 per cent in petroleum products was recorded during the period under review. In food sector, vegetable ghee production declined by 4.19 per cent, the production of cooking oil increased by 0.72 per cent, tea blended 12.40 per cent, beverages 24.31 per cent, wheat and grain milling 1.61 per cent. Among electric items, production of deep freezer, bulbs, tubes, motors, meters and transformers declined substantially by 8.56 per cent, 4.97 per cent, 3.32 per cent, 15.62 per cent, 43.81 per cent and 33.67 per cent respectively during the period under review.

Production of paper and board, phosphates fertilisers, billets, ingots, cokes, coil, plates, tractors, jeep and cars also declined during first eleven months of 2007-08 over the same period of last year. LSM was projected to grow by 12.5 per cent in the fiscal 2007-08 against previous year's 8.8 per cent but was revised downward to 7.5 per cent for the year.

Business Recorder [Pakistan's First Financial Daily]

 

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Inflation is being made worse by PPP-led government: Rs 240 billion borrowed from SBP in 13 weeks​

KARACHI (July 28 2008): The present coalition government has printed more currency notes to finance its budgetary needs than the Shaukat Aziz-led government or the caretaker set-up headed by Mohammedmian Soomro.

A weekly breakdown of government borrowing from the State Bank and commercial banks shows that in 20 weeks - from July 1st to November 15, 2007 - Federal Government under Shaukat Aziz borrowed Rs 75 billion from the central bank and Rs 62 billion from commercial banks, totalling Rs 137 billion.

In 17 weeks - from November 15, 2007 to March 25, 2008 - the 'caretakers' borrowed Rs 289 billion from State Bank. However, during this period, they also retired Rs 111 billion of treasury bills from commercial banks. In effect, the total borrowing for the budget under Mohammadmian Soomro was higher than it was under Shaukat Aziz as it stood at Rs 178 billion.

The PPP-led government despite crying foul about the high note printing by the Shaukat Aziz-Salman Shah combination resulting in sky rocketing inflation of nearly 20 percent has, however, done the same. Contrary to tall claims of being highly conscientious in relation to its responsibility towards the economic situation and holding its predecessors responsible for the present economic woes PM Gilani's government not only has stayed the same course, it has, in fact, moved one step forward by getting more currency notes printed.

In 13 weeks, ie from March 25 to June 30, 2008, the Gilani government borrowed Rs 325 billion from SBP, while it retired Rs 85 billion borrowings from commercial banks. As a consequence, the net borrowing of the present set-up is the highest ever - Rs 240 billion - in a surprisingly shorter period of only 13 weeks as compared to that of 20 weeks of Shaukat Aziz and 17 weeks of Soomro.

The present government went on a borrowing spree from SBP in the closing week of the financial year as it was committing that it wouldn't borrow "in net terms" from SBP in the next financial year. On the very last day alone, government borrowed as much Rs 55 billion from the central bank.

For the entire 2007-08 fiscal year, the Federal Government borrowed Rs 689 billion from SBP while retiring Rs 134 billion from commercial banks. As a consequence, thereof Rs 555 billion of fresh stock of Treasury Bills or money creation was undertaken by SBP.

The government has made a firm commitment that it will not borrow on net basis from the SBP and the banking system and instead finance its fiscal gap from non-bank sources. Unfortunately, however, it was within the first three weeks of the current financial year - from July 1st to July 23rd - that the government borrowed as much as Rs 34.1 billion from SBP.

This amount is in addition to drawdown of deposits by provincial governments from their balances with the central bank, which had risen due to grants provided to the provinces by the Federal government.

The only relief the central bank has received is the placement of $500 million by Bank of China with SBP. Central bank, despite protest from the Ministry of Finance, has reduced Rs 37 billion of government borrowed stock against the placement.

The State Bank can effectively drain off excess liquidity by raising the Credit Reserve Ratio (CRR) as well as Statutory Liquidity Ratio (SLR) in one go. But with the tap on (all the time) with currency printing it is forced to mop up this excess inflow through frequent open market operations (OMOs). Because of this, the overnight borrowing rate instead of reflecting a tight monetary policy shows a yo-yo movement. In case government's expenditure remains out of control and the borrowing for the budget from the central bank does not stop, SBP may need to hold daily OMO auctions to drain the liquidity out in order to keep the overnight bank rate close to its own policy rate.

At the present T-bill yields even the banks are feeling shy in lending more money to the government. With the T-bill yields within 25 bps of SBP policy rate, SBP cannot offload its stock of T-bills onto the banks unless it further raises the discount rate. Banks have already taken this into account and raised KIBOR by 350 bps as against 150 bps rise in SBP in SBP policy rate on May 22nd, 2008.

SBP wants the government to retire Rs 21 billion of existing stock at the end of every quarter. By borrowing throughout the quarter and then retiring on the last day with the help of external loans or sudden bulky inflow does not help matters. Once SBP lends to the government and then creates the T-bills - then subsequently tries to offload them through OMO, the T-bill stock of banks rises which enables them to lend more. This defeats the very purpose of a tight monetary stance aimed at containing inflation.

The argument that raising the discount rate to check inflation being fuelled by external sources ie oil and food becomes meaningless. Oil consumption reduction would help in keeping price rises in check. Raising food productivity would also reduce the fuelling of CPI because of high weightage of food.

Even if oil drops to $80 a barrel and the rise in wheat and other items in CPI is arrested - inflation cannot be reversed unless the government reduces expenditure or raises resources and brings the fiscal deficit to 3.5 percent or lower in real terms.

Business Recorder [Pakistan's First Financial Daily]

 

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Energy sector roundtable in US today​

WASHINGTON (July 29 2008): Pakistan government has set an ambitious tagret of around $20 billion as foreign investment in the energy sector, for which it is actively interacting with top companies in the USA. Highlighting the salient features of the upcoming energy conference.

The Minister of Information, Sherry Rehman, told Business Recorder that the international energy roundtable would be instrumental in attracting maximum foreign investment in the energy sector through institutional and legal support to foreign investment.

Top power companies of the world would participate in the conference to explore possibilities for making investment in Pakistan. Besides coal and hydro power projects, the international energy roundtable would also discuss gas pipeline projects as well.

She said that the global increase in the prices of POL products was a major challenge for Pakistan along with other countries of the world. Globally, consumers' tariffs are being increased along with reduction in subsidies. This has substantially increased the importance of coal as an alternative soruce of energy in the country, she added.

As the previous regime was unable to provide a clear roadmap for investment in energy sector, the present government is committed to encourage investment in the energy sector, particularly coal sector. There was no framework or policy available for foreign investors to attract investment in energy sector.In view of the situation, the coming conference is being organised by the World Bank on July 29.

Besides institutional and legal support, an effective international dispute resolution mechanism is necessary to give legal protection to the foreign investors in the energy sector. She said that 21 countries are participating in the global energy conference which would give an opportunity to foreign investors to give suggestions on increasing investment in alternative sources of energy particularly coal. There is need for more aggressive policy for attracting investment in hydro power projects and coal as alternative sources of energy in future, she said.

In the past, around $6 billion foreign investment has been witnesed in the energy sector. However, the government is likely to attract foreign investment of nearly $20 billion in the energy sector by arranging such kind of international conferences.

Referring to a 1000 mega watts power project, she said that three times more bids have been received for this huge project, reflecting foreign investors' interest in Pakistan's projects. The government would also convene a US-Pak economic dialogue in August and a joint council under trade and investment framework would be held in September 2008.

Business Recorder [Pakistan's First Financial Daily]

 

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Government borrowing 'totally unsustainable': SBP​

KARACHI (July 30 2008): The State Bank of Pakistan (SBP) has further tightened its monetary policy for another six months to curb the rising inflationary trend by increasing the key discount rate by 100 basis points (bps). The central bank has also instructed federal government to retire Rs 84 billion during the current fiscal year.

State Bank of Pakistan Governor Dr Shamshad Akhtar announced monetary policy for the July-December period at a press conference at SBP head office here on Tuesday.

-- Key discount rate raised by 100 basis points to 13 percent:

-- Fiscal deficit FY08 is Rs 865 billion or 8.3 percent of GDP

-- Fiscal excesses now visible more clearly Budget deficit target of FY09 of 4.7 percent of GDP is already coming under stress

The SBP raised its key discount rate by 100bps to 13 percent effective July 30, 2008, which is the fourth consecutive increase in last one year. Earlier, the central bank raised the rate by 50 bps from 9.5 percent to 10 percent in July 2007 and some 100bps in January 2008 from 10 percent to 10.50 percent.

In May 2008 the SBP suddenly took a tight monetary stance due to rising inflation and continuous depreciation of Pak rupee against the dollar and increased the discount rate by 150 bps to 12 percent.

Addressing the press conference, Dr Shamshad Akhtar said that considering the risk relating to rising external current account and fiscal deficits and worsening inflation outlook, the central bank has decided to raise its policy rate by 100 basis points to 13 percent effective July 30, 2008.

She stressed the government to improve the supply chain and said if the supply side issues are not addressed, the 'gap' could remain unchanged and the expected favourable impact on inflation will be diluted.

"These measures are necessary for ensuring price stability and long-term growth on sustainable basis and it is also expected that some demand pressures will recede in the current fiscal year," she added. She said that fiscal co-ordination with the monetary policy stance in particular commitment to scale down government borrowings from the central bank and to stop the import growth is critical to achieve the desired impact of monetary tightening.

"The banks have also refused to provide financing to federal government at present rate of 12 percent, therefore if the SBP did not raise the policy rate then it was likely that bank borrowing would also shift to the SBP," she added.

She said that considering the adverse impact of continued borrowing by the government from SBP on inflation, the SBP's Central Board of Directors has resolved that the government should retire Rs 21 billion in each quarter of FY09.

Dr Akhtar said in order to restore macroeconomic stability there was need for additional corrective policy actions, both at the government and central bank level. She said assuming the domestic demand continues to grow at last five-year average of 8.1 percent and the real GDP growth target of 5.5 percent for FY09 is achieved, the difference between domestic demand and supply is expected to widen further.

She pointed out that inflationary pressures in the economy are alarming as on an average, headline CPI inflation at 12.0 percent in FY08 was 5.5 percentage points above the target for the year and underlying this non-food inflation more than doubled to 13.8 percent since December 2007.

In June 2008, the headline CPI inflation (YoY) reached 30-year high of 21.5 percent, while food inflation rose to record high of 32 percent. Strong aggregate demand pressures combined with increased pass through of the persistent rise in imported oil prices contributed to high domestic inflation. On the domestic front, in addition to the demand pressures, a fall in the productive capacity of the economy is also contributing to rising inflation, she added.

"The trade-offs are not easy and global economic environment continues to be fraught with uncertainties though some trends are quite clear: global growth has slowed down, international liquidity squeeze remains and Pakistan sovereign rating prevents tapping international markets and uptrend in international commodity prices continues, in particular in oil," she observed.

Dr Akhtar underscored the need for a dynamic fiscal framework for FY09 that will incorporate necessary adjustments as economic developments evolve. She said early indications are that the budget deficit target for FY09 of 4.7 percent of GDP is already coming under stress.

Similarly, realising the estimated growth in tax revenue at 24 percent seems high given the average growth of only 12.8 percent during the last 5 years. "It must be kept in view that past few years benefited from the high and fairly robust GDP growth (7.0 percent on average); while for the coming year a growth of only 5.5 percent is being anticipated," she emphasised.

The SBP governor said the balance of payment scenario for FY09 has warranted further policy action as curtailing further import growth and raising the exports further is critical for narrowing the external current account deficit which is key to the macroeconomic sustainability.

She also stressed that additional efforts to mobilise financing to meet the external current account deficit is equally critical as the assumptions underlying balance of payment projections have changed with the rise in international oil prices and exchange rate. At the same time financing mobilisation will need to be calibrated to restore foreign exchange reserves to a more comfortable level, she added.

Business Recorder [Pakistan's First Financial Daily]

 

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Government asked to retire Rs 84 billion during fiscal year 2009​

KARACHI (July 30 2008): The State Bank of Pakistan on Tuesday asked the federal government to retire Rs 84 billion during the current fiscal year, as the borrowing has already reached historic level and rising borrowing is creating fiscal and macroeconomic imbalances.

In addition, the SBP once again demanded amendment in the Fiscal Responsibility and Debt Limitation Act, 2005. Addressing a press conference, State Bank Governor Dr Shamshad Akhtar said that considering the adverse impact of continued borrowing from SBP on inflation, the SBP Central Board of Directors has resolved that the government should retire Rs 21 billion in each quarter of FY09.

She said that very soon a delegation of the central bank would also meet government officials to convince them to retire Rs 84 billion during this fiscal year and amendment in the Fiscal Responsibility and Debt Limitation Act, 2005. She said that efforts should be made to raise additional resources for the government financing, otherwise, it will pose a risk to the monetary policy stance.

As is evident, during the first 25 days of current fiscal year, the government borrowed additional Rs 32.9 billion from the SBP and this pattern is not in line with SBP's recommendation to the government to retire Rs 21 billion during each quarter of FY09, she said.

The governor pointed out that the government's heavy reliance on SBP borrowings continues unabated with additional new borrowing of Rs 149.8 billion during May 25 to June 30, 2008. While, during the first month of current fiscal year the government borrowed some Rs 32.9 billion, which is a negative sign.

Budget for fiscal year 2008-09 estimates put it at 7 percent of GDP, while financing data available to the SBP for the full FY08 shows this could be around 8.3 percent of GDP, she added. Within two months of May and June 2008, trade and external current account deficits as percent of GDP widened further by 1.5 percentage points each and exchange rate remained under pressure.

In the same period, CPI inflation (YoY), on the back of high international commodity prices and high inflationary borrowing intensified by 4.3 percentage points. Above all, second round impact of high food inflation has embedded in the inflation expectations, she added.

Dr Akhtar said recognising this, the government and the central bank have taken pre-emptive policy actions together. Budget for FY09 has been rolled back to 4.7 percent of GDP and the government committed itself to achieve net zero borrowing during the course of the year, while enhancing its reliance on other non-bank sources.

The Central Board of Directors of SBP has recommended that the government should ensure net retirement of Rs 84 billion for FY09 with quarterly retirement of Rs 21 billion. She said these limits have been worked out keeping in view perspective need for consistency with a coherent macroeconomic framework. Support to these commitments and targets will be vital to arrest the drift in macroeconomic imbalances, she said.

"Imposing hard budgetary constraints further requires that the government amends the Fiscal Responsibility and Debt Limitation Act, 2005 to include provisions for recognising the need to phase out the government's dependence on SBP borrowings over a period," she added. This involves adherence to limits imposed on SBP borrowings henceforth, while lowering the stock of SBP borrowings," she stressed.

Dr Akhtar underscored the need for a dynamic fiscal framework for FY09 that will incorporate necessary adjustments as economic developments evolve. She said early indications are that the budget deficit target for FY09 of 4.7 percent of GDP is already coming under stress.

The governor stressed that these optimistic expenditure and revenue assumptions carry the risk of fiscal slippages beyond target again. "Even a one percentage point increase in fiscal deficit above the target level would require additional borrowings in the order of over Rs 100 billion," she observed.

"There are severe external and domestic constraints which make it difficult for raising the required financing on a timely basis for the projected fiscal deficit for FY09," she said. Generating the same amount domestically from sources other than the central bank would result in crowding out of credit availability to the private sector.

Replying to a question, she said the government has some other tools such as Pakistan Investment Bonds and national saving schemes to meet its financing needs and in the budget, the government also raised the profit on the national saving to attract investment.

She said that India and China's central banks are not providing financing to their governments therefore, inflation and discount rates are lower in these countries. Based on financing availed from SBP, it is estimated that fiscal deficit for FY08 is more than double the targeted level and even above the reported outcome in budget for FY09.

She said that consequently, the year has ended with the SBP's financing of Rs 689 billion, around 80 percent of the fiscal deficit. The stock of government debt to SBP - Market Related Treasury Bills (MRTBs) has now reached Rs 1053 billion, almost 10 percent of GDP.

Rise in fiscal deficit and inability of the government to tap non-bank and external resources over and above the projected levels resulted in excessive recourse to central bank's borrowings. During the course of H2-FY08, the government borrowed Rs 204.2 billion during January-March 2008 and Rs 283.9 billion during April-June 2008, of which Rs 55 billion alone were borrowed on the last day of this fiscal year.

Moreover, substantially large borrowing requirements have inhibited the government ability to meet the additional financing requirements from commercial banks and off-loading the existing stock of MRTBs in the market, she said.

Efforts to offload these borrowings are already exerting further pressure on Karachi Interbank Offered Rate and other market interest rates. In fact, the market has already raised its bid prices in T-bill auctions and consequently the 3 month cut-off rate has peaked to 11.8 percent reaching close to the SBP policy rate of 12 percent, she said.

Business Recorder [Pakistan's First Financial Daily]

 

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Korean Consul General offers help to build low cost houses​

KARACHI (July 30 2008): The Consul-General of Korea, Choe Su Il, said here on Tuesday that Korea can help Pakistan in developing low-cost houses for middle and lower income groups people. He said this in a meeting with the chairman of housing committee of Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Munir Sultan.

He said that Korea is very advanced in construction sector and uses most modern technology for constructing houses.

Briefing about the meeting, Munir Sultan said that the consul-general had said that by using Korean modern construction technology around 10,000 low cost house could be constructed in just three months. He said that the consul general said that according to one estimate the overall production of housing units has to be increased to 500,000 housing units annually to address 8.8 million backlog of housing units in Pakistan and to meet the housing shortfall in next 20 years.

He assured the consul general that he would present a report to the government of Pakistan to suggest using Korean technology which could help producing around 10,000 house in just three months in Karachi, Lahore and Islamabad.

Business Recorder [Pakistan's First Financial Daily]

 

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Pakistan to seek US help in nuclear energy production​

ISLAMABAD (July 29 2008): For its energy security, Pakistan will seek US help in production of nuclear energy under international safeguards in negotiations with the US administration, said Foreign Office spokesman, Mohammad Sadiq in reply to a question on Monday during weekly press briefing.

He said that all the bilateral relations ie political, economic, security and strategic dialogue to be discussed by Prime Minister Yousaf Raza Gilani, who is recently on a week-long visit to the US. Commenting on Pak-US Investment Treaty, he said that the Treaty is part of Pak-US talks agenda as Pakistan is in dire need of foreign investment.

Replying to a question about Indian involvement in terrorist activities in Pakistan, he said: "I have nothing to say at this stage without concrete information." As far as Indo-US nuclear deal is concerned, Pakistan's position is clear and well-known, national interest will be protected at all costs, Sadiq said.

Commenting on the firing incidents taking place across LoC, he said such incidents are taking place but are local in nature and could be resolved at local level. Good, progressing relations between Pakistan and India are in the interest of both the countries, he added.

Dr A Q Khan's case is closed therefore, his statements on nuclear safety issues carry no weight. Pakistan's N-programme is fully secured and we are having the best security apparatus in place, he opined. However, Sadiq showed his inability to comment on Wana attacks from Afghan side as he had no official verdict yet.

About the detention of Washington-based Pakistani journalist, he said: "I am not aware of the details, why he was nabbed, but I am in touch with the family and assisting them in his early release."

Modalities of Benazir Bhutto's murder probe under the auspices of the UN are being worked out, he said in reply to a question. Commenting on Pak-India peace process and fifth round of composite dialogue, the spokesman said the direction is positive and we need to move forward for bringing prosperity to this region.

There is still no evidence of any Pak lady in Bagram Jail, but we are in constant touch with Afghan and the US authorities, he added. In response to a question the spokesman said that Syed Khursheed Ahmed Shah, Minister for Labour, Manpower and Overseas Pakistanis will lead Pakistan's delegation to the 15th NAM ministerial meeting.

In his opening statement, the Foreign Office spokesman said, 15th Saarc summit will be held in Colombo, Sri Lanka from 2-3 August 2008. Heads of states or governments of Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka will attend the summit.

The summit will be preceded by the meetings of the Saarc Council of Ministers (July 31 to August 1), Standing Committee (July 29 to 30) and the Programming Committee (July 27 to 28). Foreign Minister, Makhdoom Shah Mahmood Qureshi will participate in the 30th Session of Saarc Council of Ministers and the Prime Minister will lead Pakistan's delegation in the summit. The occasion will also be utilised for bilateral meetings on the sidelines of the summit.

A number of Saarc documents including the Charter of Saarc Development Fund; Agreement on the Establishment of Saarc Regional Standards Organisation (Sarso); Saarc Convention on Mutual Assistance in Criminal Matters; and Protocol on the Accession of Afghanistan to Safta are expected to be signed during the summit.

Foreign Minister Shah Mahmood Qureshi will participate in the 30th Session of Saarc Council of Ministers. The council is second highest decision making forum of Saarc, next to Saarc summit. It is composed of the foreign ministers of the Saarc member states, and generally meets twice a year.

Business Recorder [Pakistan's First Financial Daily]

 

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IT literacy planned for women councillors​

ISLAMABAD (July 29 2008): The Ministry of Women Development (MoWD) has planned to make women councillors' computer literate through an Information Technology (IT) training programme. An official of the ministry told APP that the training would start soon throughout the country.

The ministry has already trained 3,100 women councillors giving them know-how about basic computer skills. About Rs 97 million was demanded for the five years programme by the ministry, he informed. The programme, he said, was mainly initiated to educate the women councillors of remote areas at Tehsil council and Union council level with computer education so that they can play their role in nation building.

It would help raise computer literacy among female elected representatives at the grassroots level, he said. Under the plan, basic IT training will be imparted to 11,500 women councillors in the next five years from July 2008 to July 2013.

For the training, the ministry has set matriculation, as the minimum education qualification required for female councillors from Punjab, urban Sindh and the NWFP, and middle (8th grade) for those coming from Balochistan, interior Sindh and distant areas of the NWFP.

The training will be undertaken in Punjab's 35 districts, Sindh's 23, the NWFP's 24, Balochistan's 29 and 22 districts of Azad Kashmir, Northern Areas, Tribal Areas and Islamabad.

The official also informed the press that Rs 400 TA/DA a day and Rs 2, 800 for participation in the seven-day training session will be paid to the women councillors. The amount of TA/DA will later be enhanced to 500 per day. The trainees will also be provided with reading material, he said.

Further, he said the by women ministry would formulate training modules while NGOs in the respective areas at provincial level would impart training in different districts. The computer centres with well-equipped laboratories would train women councillors by hiring skilful IT teachers.

Business Recorder [Pakistan's First Financial Daily]

 

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PTA remains vigilant as cellular phone sector shows significant growth​

ISLAMABAD (July 29 2008): Pakistan Telecommunication Authority (PTA) remained vigilant for all developments in the telecom sector during the current quarter as the cellular mobile phone sector showed immense growth and the cellular mobile phone operators remained aggressive for marketing and expansion of cellular network.

China Mobile (Zong) came up with increasing subscribers at a rapid pace while Telenor and Mobilink offered various value-added services at lowered rates to attract more customers.

The competition among cellular Mobile phone operators has become more intensive. With the shifting from seven digits to eight numbers, all switches in Pakistan Telecommunication Company Limited (PTCL) have been enabled for eight digits, which was a huge task for the PTA who took it bravely.

The verification of unauthorised Subscriber Identity Modules (SIMs) was another Herculean task, which was worked down tremendously from all aspects. The PTA, in collaboration with National Database and Registration Authority (NADRA) and mobile operators, has devised a comprehensive mechanism to very the SIMs.

The market share is considered an important tool to gauge the level of competition in any sector of the economy and helps determine a Significant Market Power Player (SMP) whose tariff needs to be regulated to safeguard the competition in any sector. During the current year, the market share of Mobilink declined from 44.3 percent in March 2007 to 38.5 percent in March 2008 despite the fact that the company added more than seven million subscribers.

Telenor improved its market share from 16.3 percent in March 2007 to 20.2 percent in March 2008 and also added 7.6 million subscribers during the period. The market share of Ufone remained did not increase during the last one year and remained at 20 percent while Zong became an emerging player in cellular mobile market of the country who added 1.14 percent share during the last year and its share reached upto 2.6 percent in March 2008.

Business Recorder [Pakistan's First Financial Daily]

 

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Minister directs to expedite work on Gomal Zam Dam​

PESHAWAR (July 30 2008): NWFP Minister for Agriculture, Arbab Muhammad Ayub Jan has directed the concerned authorities to expedite the pace of work over the Gomal Zam Dam project so that a large portion of land could be prepared for the sowing of wheat in the southern districts of NWFP.

He issued these directives while presiding over a high level meeting regarding the re-initiation of Rod Kohi Irrigation system at Senior Member Board of Revenue (SMBR) office on Tuesday. Provincial Minister for Revenue Habibur Rehman Tanoli, SMBR, Ihsanullah Khan, MPA Israrullah Khan Gandapur, former provincial ministers Nawabzada Mohsin Ali Khan and Sanaullah Khan Mian khel were also present in the meeting.

The meeting had decided to constitute a high level committee under the chairmanship of NWFP minister for agriculture while minister for revenue, SMBR, DG small dams, secretaries of P&D and finance and concerned MPAs of the area would be the members of the committee.

The meeting also decided that 13 bulldozers would be provided immediately along with a mobile workshop facility to D.I. Khan and Tank districts for the repairing of existing and new Rod Kohi system. The meeting also ordered to repair the present Rod Kohi structure and warren kanal Tank as the chief minister taking keen interest in the project.

Israrullah Khan Gandapur pointed out the slow pace of work over the Gomal Zam project and asked the government bench to issue directives for expedition of work. Arbab Muhammad Ayub Jan has directed the officials to accelerate the construction work over the project and it should be completed within the specified period. He said with the completion of the project 0.6 million acres fertile land would get the irrigation water facilities and the land would be able to produce sufficient wheat to fulfil the requirements of the province.

He said that the chief minister himself was very much interested in the agriculture sector and wanted to see the province self-sufficient in the agriculture field and had already ordered to remove each and every hurdle to achieve the desired goal.

He asked the members of the constituted committee to come up with the positive proposals for the success of Rod Kohi projects and to submit the report to him for onward submission to the chief minister within few days. The meeting also reviewed the Head Zam Tank project in detail and decided to restart work on this valuable project.

Business Recorder [Pakistan's First Financial Daily]

 

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The need for decentralisation​

EDITORIAL (July 30 2008): The Punjab government has raised a very valid objection with regard to a practice under which our presidents and prime ministers have been routinely issuing directives, during periodic field tours, for the launching of development schemes on a 50-50 cost sharing basis between the federal and provincial governments.

This has been going on usually without any discussion with the cost's co-sharer. Punjab Chief Minister Shahbaz Sharif thinks it is an unfair practice, and has decided to take a stand on the issue. A Recorder report says the province has sent a letter to the Centre, saying that the federal government should fully fund all such projects.

It rightly points out that financing of such projects over and above the approved Medium Term Development Framework and Annual Development Programme distorts provincial priorities. All the more so when social sector projects related to provincial subjects such as education, healthcare, water supply, rural development, agriculture, livestock, food, fisheries, forestry, and small industries, are formulated and implemented without consultation with the province.

It is common for the two tiers of government to work in parallel, duplicating efforts. Their jobs overlap quite often, which causes difficulties. The letter mentions the examples of Tameer-e-Pakistan, Tameer-e-Punjab and the various rural electrification and gas supply projects, arguing that funding for all such projects should be provided to the provinces to plan, implement, monitor and manage them. This is necessary to prevent wastage of effort as well as resources.

The situation, of course, is not peculiar to Punjab. The other three provinces have even more serious complaints to make against the Centre. The problem is related to our rulers' penchant for centralisation in stark violation of the federating units' rights that call for fiscal federalism and greater provincial autonomy.

An unmistakable symptom of the malaise is an unending dispute over the National Finance Commission Award, which remains deadlocked over horizontal as well as vertical distribution of national resources. Direly needed is a new resource allocation criterion which corrects inter-provincial imbalances created by the existing population-based resource allocation formula favouring the federation's dominant member, Punjab.

It is equally important to amend the vertical distribution formula that presently hands the lion's share from the resources pie to the Centre, leaving the provinces to fight over a mere 43.6 percent leftover. There is a strong case for rationalising the ratio of centre to provinces in terms of distribution of resources, and towards that end, for the Federal government to reduce its expenditure.

A beginning could be made with the concurrent list. The centre must hand all subjects included in the Concurrent Legislative List to the provinces, as required by the Constitution. The measure will bring about a significant reduction in the Federal government's financial obligations. And of course, it will automatically address issues like the ones the Punjab government has raised in its communication to Islamabad.

Business Recorder [Pakistan's First Financial Daily]

 

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Pakistan needs 16,000 MW to overcome power crisis: Minister ​

WASHINGTON: July 30, 2008

Pakistan requires 16,000 mega watt electricity generation to overcome the ongoing power crisis, for which 30 billion dollar will be required for relevant projects till year 2015, Minister for Water and Power Raja Pervaiz Ashraf said on Tuesday.

He was addressing a joint press conference with Sindh Chief Minister Qaim Ali Shah after attending the first day of Energy Roundtable Conference on Thar Coal Project organised in collaboration with World Bank here.

The Minister termed the conference in Washington as successful in which many international companies showed their interest to invest in the power sector of Pakistan.

He said selection of power companies would be done through international competitive bidding in a transparent manner, and the investors would undergo a one-go and hassle free process of registration.

He said it could take three to four years for the generation of electricity from the Thar Coal project.

He said the agreement with Kyrgyzstan and Tajikistan on import of electricity would be finalised on August 4.

The Minister said the country's first windmill would start functioning in Jampir, Thatta next month while 50 more windmills would be installed by August 14 which would produce 200 mega watt electricity.

The Sindh Chief Minister, who is also the Chairman of Thar Coal Authority said there are 185 billion metric ton coal reserves in Sindh which would be utilised to generate electricity for the province and the country.

Pakistan needs 16,000 MW to overcome power crisis: Minister : Business Recorder | LATEST NEWS